Author Topic: Life insurance opinions  (Read 1511 times)

Hula Hoop

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Life insurance opinions
« on: September 27, 2017, 03:07:45 PM »
I'm trying to decide whether to continue with life insurance on my husband.  We're a family of 4 and I'm the breadwinner.  Husband makes a lower income but we would be able to survive on my income alone.  We also have savings - mostly retirement accounts and home equity but I also more than $100K invested and my husband has around the same in his own account.  Mortgage payments are very low.

His life insurance premiums are high as he is in his 50s.  Our kids are only 5 and 9 though.  Husband picks the kids up from school every day as he has a flexible schedule and he also deals with a lot of random sick days and days when school is closed.

I kind of feel that if the worst were to happen, I'd probably move back to my home country with the kids and it would cost a bit to find a new job and get on my feet.  At the same time, I could live with family temporarily and my family would probably also help out a bit financially, if necessary.

So should I cancel his life insurance?  I would keep the (cheaper as I am younger) insurance on me as DH would have major issues making ends meet without my salary.

BlueMR2

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Re: Life insurance opinions
« Reply #1 on: September 27, 2017, 03:45:10 PM »
In your case, *I* would not carry the life insurance.  I see it as a means to protect ones loved ones from an income loss that can't be overcome.  It sounds like you *can* overcome that loss of income.

Some people view it as a kind of "last gift" when somebody dies though...

nereo

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Re: Life insurance opinions
« Reply #2 on: September 27, 2017, 05:12:02 PM »
what BlueMR2 said.
Insurance is designed to replace income should really bad things happen. In your case you can survive without it, and you have substaintial savings.  In insurance parlance, you can 'self-insure'.

Don't forget that SS already offers you survivorship benefits, and will also provide should he become personally disabled.  Since you have children under the age of 16 the age pre-requisits are waived for collecting survivorship benefits.  You can calculate the benefits by going online, but it's typically 75% of your spouses full retirement benefit if you start taking distributions while having a child under the age of 16. It's pretty easy to get $1,000/mo+ for your entire life in survivorship benefits.

Hula Hoop

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Re: Life insurance opinions
« Reply #3 on: September 27, 2017, 10:01:53 PM »
Thanks for the advice.

Nereo - we're not in the US so no SS benefits.  I need to investigate local options though.

Polaria

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Re: Life insurance opinions
« Reply #4 on: September 28, 2017, 12:17:03 AM »
I am linking back to a similar discussion.

https://forum.mrmoneymustache.com/ask-a-mustachian/life-insurance-questions

My comment here is the same as the one in the discussion linked above:

To determine what amount is reasonable, I'd say you have to run a "simulation" to determine the consequences of 3 scenarios:
- your passing
- your husband's passing
- you both passing.

If you have a financial shortfall between income and expenses in those simulations then insurance may be worthwhile to cover it , if not insurance wouldn't be necessary.
These simulations may also allow you to identify if you have other things to set up, for example who is going to take care of your children if you both pass away.


Laura33

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Re: Life insurance opinions
« Reply #5 on: September 28, 2017, 07:11:50 AM »
I am more conservative on insurance than others.  Either one of us could have (almost) always gotten by without it -- but we didn't want some horrible event to destroy the life we had planned.  E.g., I could have sold the house and bought something smaller and cheaper, but I didn't want to be forced to uproot the kids at a horrible time for everyone -- and I didn't want to have to work until 70 because we couldn't save much on my income alone.  So we looked at what amount of money would be necessary to allow the survivor NOT to make major changes (at least, not unless/until I chose to).  For us, that was pretty much the difference between our daycare payments and a live-in nanny, plus a little extra to cover the lost retirement savings from losing the second income.  That ended up still being a noticeable chunk, but significantly less than what the insurance agents would say we needed.  But we were also younger at the time and had really cheap term insurance.

In your case, do the math both ways.  It sounds like you could move home, live cheaply, and get free childcare help -- but would you want to do that?  And if not, how much insurance would you really need to stay put?  You need to weigh that out against the cost of his rising premiums.  One option may be to just decrease the amount of his insurance to something that would give you a chunk of cash to cover the cost of the move and the initial setup costs on the other end.

acroy

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Re: Life insurance opinions
« Reply #6 on: September 28, 2017, 07:15:48 AM »
I suggest cancel.